November 30, 2011Chalice Moves Towards A Development Decision At...

November 30, 2011
Chalice Moves Towards A Development Decision At Koka, Politics Permitting

By Our Man in Oz

If gold in the ground, and a US$338 per ounce cost of production was all that counted, then Chalice Gold Mines would be flying today. That the ASX-listed company is not trading miles above its current A26 cents a share is a clear demonstration of the impact that politics can have on a risk profile. It might represent a stand-out opportunity for investors, because if events fall the right way Chalice will head for the stratosphere. The key to Chalice is the Koka gold deposit in the Red Sea country of Eritrea. The lock on the Chalice share price is the same thing, which might sound confusing, but that’s before we’ve got onto the stunningly complex politics which make the horn of Africa such a damned difficult place.
Doug Jones

Doug Jones

Geology and finance first. At Koka, Chalice has stamped its foot on a starter-project with an initial 760,000 ounces of open-pittable gold in ore which grades a very attractive 5.1 grams a tonne. That grade, combined with the easy open pit design, and the easy treatment of the ore, is what allows Koka to present investors with that world-class cash operating cost estimate of US$338 per ounce, a number which infers a margin at the current gold price of around US$1380 per ounce.
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